homebusiness Newscompanies NewsIndia's summer AC sales not as good as makers hoped for, says Blue Star
India's summer AC sales not as good as makers hoped for, says Blue Star
With early onset of summers this year, Blue Star expected 25 percent year on year growth in room air conditioners business for April, but the actual demand stood much lower. Similarly the month of May witnessed marginal growth in demand year on year, compared with the expected 20 percent growth.
Blue Star with strong revenue growth and market share gain in fourth quarter was able to maintain healthy profitability. The room air conditioner maker has focused on steady capacity expansion at Sri city plant as well as growth in its commercial refrigeration segment.
With early onset of summers this year, Blue Star expected 25 percent year on year growth in room air conditioners business for April, but the actual demand stood much lower. Similarly the month of May witnessed marginal growth in demand year on year, compared with the expected 20 percent growth.
Although, festive season is expected to fare much better. B Thiagarajan, Managing Director at Blue Star in an interaction with CNBC-TV18 said "Summer was not as good as I anticipated, though I believe that if summer season demand was low, festive season demand will be high". He maintains his earlier guidance for industry growth at 15 to 20 percent in FY24.
The company's commercial refrigeration business, also seasonal in nature, is prospering with growth of over 15 percent in April and May. Commercial refrigeration includes products like water coolers, deep freezers, etc. used in a variety of industries like pharmaceuticals, food processing and healthcare. Commercial air conditioners are growing more than 25 percent in April and May while witnessing high demand from various segments like shops, showrooms, boutiques, manufacturing units, airports, restaurants, data centres, etc.
Blue Star which earlier was a premium product seller, had lately repositioned itself as an 'affordable premium' brand and is now also catering to the affordable segment.
The EBITDA margin for fourth quarter stood at 6.8 percent. EBITDA is earnings before interest, tax, depreciation, and amortisation. Thiagarajan does not expect margins to revert to pre-covid levels for Blue Star as well as for the industry.
Peer, Voltas reported weak performance in the fourth quarter and missed the street estimates. The EBITDA margin at 7.4 percent was lower than 9.8 percent in the corresponding period in the previous fiscal.
The stock is trading flat on the exchanges at 2:30 pm on June 1st.
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